Changes in Regulations Discharge of Loans for Total and Permanent Disability
On July 1, 2008, the regulations covering discharge of federal student loans for Total and Permanent Disability (TPD) change. Discharge applications received on or after that date will be processed under the new regulations.
The table below compares the new and old provisions, and describes the effect of some of these changes on borrowers seeking discharge for TPD.
Application Received Before July 1, 2008 Date of Disability – the borrower’s date of disability determined by the date stated by physician on the application. Application Submission – no limitation on when a borrower can submit the TPD application after the date of disability. Conditional Discharge Period – borrower’s who pass the three-part TPD review (medical, NSLDS loan disbursement, and income) are placed in Conditional Discharge for 3 years. The Conditional Discharge period begins on the Date of Disability. Borrower’s, who submit a TPD application a significant period after becoming disabled, can shorten or satisfy the Conditional Discharge Period at the time TPD review is completed. Return of Loan Disbursements – borrowers who receive student loans after the date of disability are ineligible for discharge. No provisions for regaining eligibility through return of a disbursement. Refund of Payments – when a borrower is placed in Conditional Discharge, voluntary and involuntary payments made after the Date of Disability are refunded. In cases where the Date of Disability was significantly earlier than the submission of the application, the borrower placed in Conditional Discharge may be entitled to a significant refund. |
Application Received After July 1, 2008 Date of Disability – the borrower’s date of disability is the date that the physician signs the application. Application Submission – application must be received within 90 days of the date of disability. Conditional Discharge Period – borrower’s who pass the three-part TPD review (medical, NSLDS loan Disbursement, and income) will be placed in Conditional Discharge for 3 years from the date of disability. Return of Loan Disbursements - borrowers who receive student loans after the date the date of disability are ineligible for discharge. Borrowers may regain eligibility for discharge by returning disbursements of loans made after the Date of Disability within 120 days of disbursement. Refund of Payments – when a borrower is placed in Conditional Discharge, voluntary and involuntary Payments made after the Date of Disability are refunded. Refunds of payments are limited to those made after the date of disability. |
